IRS Awards $104M to Whistleblower in UBS Case


U.S. tax authorities have awarded $104 million to a whistleblower in a major tax fraud case against Swiss bank UBS AG that widened a government crackdown on Americans avoiding taxes in Switzerland, the whistleblower's lawyers said on Tuesday.

Bradley Birkenfeld, freed last month from prison, was not present at the news conference where his attorneys announced what may be the largest payout ever under an Internal Revenue Service whistleblower program recently criticized Congress.

Birkenfeld had sought a substantial reward for his role in a tax-dodging case that resulted in UBS in early 2009 entering into a deferred prosecution agreement and paying $780 million in fines, penalties, interest and restitution.

Birkenfeld had turned over information about UBS to the authorities, but later was jailed after the U.S. government said he withheld other information.

IRS spokeswoman Michelle Eldridge confirmed the award and said in a statement: "The IRS believes that the whistleblower statute provides a valuable tool to combat tax non-compliance, and this award reflects our commitment to the law."

The IRS whistleblower office gathers information from people who want to alert the tax-collecting agency to tax misconduct. Over the years, the office has brought in hundreds of millions of dollars in tax revenue for the U.S. government that would not have been collected without tips from whistleblowers.

But the office collected only $48 million in tax revenues in fiscal 2011, down from $464 million in fiscal 2010, the IRS reported to Congress in June. That was the lowest collection level since at least fiscal 2004. The drop coincided with a decline in new whistleblower cases.

Republican Senator Charles Grassley, who wrote 2006 legislation that overhauled the program, said in June that the IRS had been driving away whistleblowers.